Global Business Complexity Index notes shift away from stringent tax audits in Asia-Pacific jurisdictions
SINGAPORE has come in second in Asia and 18th worldwide on a ranking of the simplest places to do business, beating countries such as India, China and Korea.
The Republic lost out to Hong Kong for the top Asia spot on this year’s Global Business Complexity Index, released as part of a report by business administration support services firm TMF Group.
The index ranked 77 jurisdictions across the world in three areas – accounting and tax standards, human resources and payroll matters, and rules, regulations and penalties.
Despite “uncertain times”, Singapore remains an attractive regional and international business hub, given the simplicity of doing business, said Edmund Lee, TMF Group Singapore managing director.
However, he added that evolving compliance requirements and strict enforcement could make it more intricate to do business than before. “Singapore firms need to better understand the rules of engagement with regulators and integrate them into their policies.”
The country scored “exceptionally well” in the area of accounting and tax standards, due to its tax clarity, relative ease of filing requirements, and alignment with International Financial Reporting Standards.
Other positive factors were its competitive corporate tax rate of 17 per cent, its Double Tax Agreements signed with over 80 countries, and the simplified e-filing processes.
The nation also scored “above average” on human resources and payroll matters, due to its transparent employment and payroll guidelines, ease of hiring, and focus on talent.
In 2022, it is set to raise its statutory retirement age to 65 years from 62 years currently.
However, on rules and regulations, TMF’s report said the Republic had continued to step up enforcement on basic compliance obligations such as filings and convening annual general meetings, resulting in increased business complexity.
The report noted that the evolution of regulatory frameworks across the Asia-Pacific – already moving “at a quicker pace to become more robust for businesses” – had been accelerated by the Covid-19 pandemic.
In terms of tax, Asia-Pacific jurisdictions are “making a shift away from their well-known stringent auditing processes to provide relief to businesses affected by the pandemic”, the report said.
For example, the Inland Revenue Authority of Singapore has granted a series of automatic extensions to tax-filing deadlines, as well as a three-month deadline extension for corporate tax payments, in light of the pandemic.
The Asia-Pacific was also found to have one of the highest proportions of jurisdictions implementing online submissions of tax invoices via an authority portal. This includes Singapore, whose Accounting and Corporate Regulatory Authority has continued to encourage digital solutions and e-filing.
The e-filing trend is expected to accelerate as more businesses digitalise amid safe-distancing measures and increased remote work, the report noted.
Another measure the Republic implemented to improve the ease of doing business amid Covid-19 was the government’s Jobs Support Scheme, which gives companies payouts to help cover the wages of local workers.
The nation is also considering expanding the acceptability of e-signatures for trust, property and financial instruments, instead of traditional requirements that add to business complexity, such as the use of an official stamp.